Friday, July 31, 2009

You need to manage your credit cards wisely. Otherwise, you may end up in financial trouble. Unfortunately, there are many who don’t realise that they may be making huge mistakes with the use of their credit cards. Here are top 7 credit card mistakes that card holders make:1. Paying Just the Minimum Sum.The minimum sum is just an amount that you must pay back each month to avoid defaulting on the debt. If you pay just the minimum sum, the rest of your outstanding is subject to interest computations. Always pay back more than the minimum sum or make full payments to avoid credit card debt.2. Making Late Payments.If you don’t set up any kind of automatic debit payment from your bank account, then it can be tempting to just put your credit card bill aside and get to it when you have time. Before you know it, a few weeks have gone by and you’re late. If you leave it to the deadline, you may find that the payment won’t get there quickly enough.Paying late is a big mistake for an awful lot of reasons. You will almost certainly be charged a late payment fee, and your late payment will go on your credit report. You may also find that you lose any good rate you had or any preferential rates that you may in the future receive.To avoid late payment, you should always post your payment a long time before the due date (at least a week). If you’ve left it to the last minute, phone up and try to pay that way.3.Being deceived by Offers from Credit Card Companies.It is never, ever worth getting a higher-interest card simply because it offers some kind of loyalty points, flight miles or whatever. Even if it offers a cash reward, it is unlikely to be more than you would pay in extra interest – after all, why would they give you free money?4. Collecting Cards.Some think it looks good on them to have a wallet choked full of credit cards. Especially if the wallet is packed with gold and platinum ones. But envy not! These card holders may well in a situation of having to keep track of all the different cards, balances and interest rates.In fact, you should limit yourself to a maximum of three cards at a time. Any more starts to make you look over-committed in your credit report, and could get you turned down for a bigger loan.5. Charging More to Earn More Points.The credit card companies are clever in rewarding you with more bonus and loyalty points if you charge more during a promotion period or a holiday season. You may end up with shopping that you don’t need just so as to earn more points. If you can well afford all your purchases, fine! But if not, you may be in for a massive headache when your bill comes!6. Using Your Credit Limits to the Max.Your limit is a maximum limit; not a minimum one! Whatever you do, don’t get a card and immediately spend your whole limit. This looks very bad. It is better to spend about halfway regularly and pay it back.7. Not Reading the Terms and Conditions.Finally, as ever, don’t sign anything you haven’t read! I know it can be tough to read all the fine print but if you do not know what you are getting into, then you shouldn’t get the card. Pay special attention to any future increases in rates, and what kind of fees you can be charged.

Thursday, July 30, 2009

What is a Debit Card?The card you use at the ATM is known as a debit card. When debit cards first appeared it was easy to tell them apart from credit cards. Debit cards didn’t have a credit card company logo on them; instead, they usually just had your bank name, your account number and your name.Today debit cards look exactly like credit cards even carrying the same logos. Both types of cards can be swiped at the checkout counter , used to make purchases on the internet, or to pay for the fill-up at the gas pump. When you use your debit card to make a purchase, it’s just like using cash. The account that is attached to your debit card, in most cases your checking account, is automatically debited when you use your debit card. The cost of your purchase is deducted from the funds you have in that account. In the case of a credit card, you can pay just 5% of your bill amount and carry forward the balance to be paid the next time. You do not have to settle all in one go. This is referred to as revolving credit.What is a Credit Card?On the other hand, when you use your credit card to make a purchase you are using someone’s else’s money, specifically the issuer of the credit card, usually a banking institution.In effect, you agree to pay them back the money you borrowed to make your purchase. In addition you will also pay interest on the money “loaned” to you at the rate which you agreed to when you applied for their credit card. This is known as the annual percentage rate (APR). While the two cards might act and look alike, the levels of consumer protection that each type of card provides can be different.Credit Cards offer Better Protection!Under federal law, if someone steals your credit card you're only responsible to pay the first $50 of unauthorized charges. However, if you notify the credit card issuer before a thief is able to make any charges you may be free from all liability. If the credit card is not physically present when an unauthorized or fraudulent purchase is made, such as over the internet, you’re also free from liability for those charges.MasterCard and Visa offer zero-liability protection where you won’t pay any charges if someone uses your credit card to make an unauthorized purchase.The protection offered to debit card fraud is similar but with a few exceptions. For example, your liability under federal law is limited to $50, the same as for a credit card, but only if you notify the issuer within two business days of discovering the card's loss or theft. Your liability for debit card fraud can jump up to $500 if you don’t report the loss or theft within two business days. And if you are the type of person that gives a passing glance to your monthly bank statement, you could be totally liable for any fraudulent debit card charges if you wait 60 days or more from the time your statement is mailed. Visa and MasterCard zero-liability protection applies to your debit card but only for transactions that do not involve the use of your PIN (personal identification number).Additional protection against fraudulent use of your credit or debit cards may be available through your homeowner’s or renter’s insurance. Check your policy or with your agent for more information about your coverage.Also be aware that you should contact your card issuer by certified letter, return receipt requested, after you’ve contacted them by phone to protect your consumer rights.As for which card to use for what type of purchase, most experts agree that you should use your debit card for the same type of purchases you’d make as if you were using cash. Therefore, it makes more sense to use your debit card than your credit card at the grocery store or gas station (provided you have sufficient funds to cover these purchases of course).Credit Card Purchase DisputesYou should avoid using your debit card for any online purchase or for something which is expensive. Why? The main reason is that it is much easier to dispute a charge when you use your credit card. Your credit card company will remove the charge until the problem is resolved.With your debit card you are stuck dealing with the merchant directly to resolve any problems with a purchase. The merchant establishment will have a debit terminal. When you give your card to make the payment, the card will be swiped. The moment it is done, an electronic message is sent to the bank which checks to see if the customer has that much money in his/her account. A credit card requires the bank to make a payment to the merchant establishment (online shop, hotel or wherever you spend money using your card). The cardholder has to settle the bill later.

Wednesday, July 29, 2009

Which of the following is the biggest threat to your credit card security?

a) Shopping online with a credit cardb) Shopping in a real store with your credit cardc) Ordering something over the phone with your credit card

The answer may surprise you. It's b - shopping in a real store with a credit card. Despite all the controversy and publicity surrounding internet phishing and identity theft, shopping online is a relatively safe process. Credit card fraudsters are far more likely to get your credit card numbers and ID information by hacking into a bank or credit card company computer than they are to hack into an online store's server.

The truth is that there are some dangers to using credit cards in ANY situation - and there are ways to safeguard your information and security no matter where you shop with your credit card.

When shopping online…

·Only shop reputable sites. If a shopping web site has been around for a while, it's a pretty good bet that they're legitimate. ·Always type the name of a site into your browser address bar rather than clicking on a link in your email. That way you'll be sure that you're going to the company's actual site and not a fake mirror.·Use an online money transfer service rather than your usual credit card. You can fund an account with a service like Paypal via your credit card or bank account - but your information isn't freely available. When you pay via PayPal, the only information that the seller gets about you is your email address.

When shopping in a real store…

·Keep your eye on your credit card. Stores with the latest tech in credit card scanning won't ever even handle your card - you slide it in the scanner yourself and it never leaves your possession. In stores that aren't that hip yet, keep your eye on what's happening with your card, and ALWAYS take your credit card receipt. Until everyone is using the latest scanners and printers that only print out the last four digits of your credit card, discarded credit card receipts are the easiest way for thieves to get hold of your credit card numbers.

When shopping by phone…

·Never, ever, ever give your credit card numbers to someone who called you. No matter how good a deal sounds, insist on being given the time to confirm the identity and company of the person you're speaking with.

As you can see, for the most part, common sense is all it takes to keep your credit card information safe!

Tuesday, July 28, 2009

Don’t let them fool you. All those solicitations you receive in the mail for credit card applications are meant to reel you in and hook you. Big time. In addition, new bankruptcy laws in the US and higher monthly minimum payment requirements are in place to help stem defaults on loans and to force consumers to pay down debt quicker. All of this sounds great, but credit card companies want to keep you in debt as long as possible. Please read on for all the stimulating details.If you have had problems in the past paying down debt, do not think for a moment that you will have it any easier in the future. Thanks to legislation introduced by Congress and signed by the president earlier in 2005, filing for bankruptcy to escape debt has become more difficult. Much more so. In addition, credit card companies have raised your monthly minimum payment levels, in some cases doubling the minimum amount you must pay. Consider this last step a side issue related to the new bankruptcy legislation; the credit card companies are not legally obligated to raise minimums but they were pressured into doing so in exchange for passage of the new bankruptcy law.Do not even think for a moment that credit card companies want you to get out of debt.For starters, credit card rates have been rising steadily for over two years. As the prime rate goes up, your credit card interest rate goes up. Unless, of course, you have a fixed rate and you have been paying your bills on time. However, one late payment and, uh oh, you are in big trouble.If you are late making a payment, even just once, you will likely be hit with a one time late fee charge of $29 or $39. In addition, that "sweet rate" you negotiated last year may automatically disappear. Zero percent financing can quickly turn into an 18.9% interest rate in no time and enforced retroactively too. Even “lower rate” cards with annual percentage rates of 10%, 12%, or more, can suddenly reflect rates of 24.9%, 29%, 35%, or even higher!This is all perfectly legal too!Read your credit card disclosure agreement – as if anyone even bothers to do so – for all the boring details. Exceptions and rules are the name of the game; there is a trap laying wide open for you to step on.The next area of socking it to you is an old one: annual fees. Yes, they are back; for years, credit card companies -- in order to remain competitive -- waived annual fees. Originally, it was one small way for them to extract some cash from you: you paid them something every year even if you paid off your card monthly.If you are like me, the whole concept of charging someone to access credit is absurd. Companies make a mint off of high interest rates as it is; throwing another fee on top of things is both apparent and transparent! Now, annual fees are back. Oh, sure, credit card companies must notify you in writing of these changes before they are put in place, but they certainly hope you won’t cancel your account in response to the "new" fee or that you will forget the notice completely and simply pay the fee. Do they think that we are stupid? I believe so!There are two other areas where credit card companies attempt to pull a fast one on consumers: your payment due date and payment mailing address.Your payment due date, which may have been "static" for years, could suddenly have been moved up. This means that if you are used to paying off your Visa card on the 24th of the month, it may suddenly have been moved to the 16th the following month. Without notifying you of the change either!The address where you send your money may have changed too. Is this a big deal? It certainly is if you mail your payments in. Let’s say that you live in New Jersey and your XYZ Bank card payment goes to a South Hackensack post office. If you mail your payment in five days before the due date, you probably allowed enough time for your payment to get to the bank. Warning: Watch out that their payment address hasn’t suddenly been moved to Ohio. Your next payment will likely end up being late.Oh, so you pay online? Don’t think that the bank credits your money immediately either. I have seen it take five days for money to electronically leave my checking account and be wired to another bank’s account. The post office moves a live check faster than that!A moved payment due date and a changed payment address are designed to make your payments late so that the credit card company can charge you a late fee and raise your rates.This is perfectly legal as well. Is it ethical? Hey, we’re talking about the financial services industry. What else do you expect?Financial institutions make money off of consumers through interest rates and fee services. Please do not think for a moment that any credit card company has your best interests at heart. They don’t; they are in business to please their shareholders. Get informed and take action when one of these "perfectly legal" practices is pulled on you. You can get fees canceled and have your credit card rate lowered if you complain; back it all up in writing in order to preserve your rights.A savvy consumer is an informed consumer; learn what tricks credit card companies use and fight back. Annually order free credit reports from Experian, TransUnion, and Equifax to make sure that unfavorable reports from creditors have not been unfairly tagged to your record.

Monday, July 27, 2009

Many great credit card companies are now offering their loyal cardholders credit card rewards. This provides the cardholder an opportunity to gain prizes just because they use their card. It is a great incentive for those that may not use their card much. The more credit card rewards they will receive, the more likely they are to use their card more frequently. Credit card companies realize that they profit more when cardholders use their cards more, and so the process is profitable to all involved.ProgramsEach card that offers credit card rewards will have slightly different programs than the rest. Some will offer a cash back reward, which is essentially giving the cardholder a certain percentage of their spending amount back. This is usually done annually or may be done monthly. These cards are great for those who use their cards frequently but don’t have time to deal with points and other credit card rewards other cards may offer. Some credit cards rewards will be offered in the form of sky miles or other flying incentives. These credit card rewards are perfect for the cardholder who travels frequently. If the cardholder is saving up their points for a free flight, they will be much more likely to use their card rather than cash. Other credit card rewards include other miscellaneous prizes. Some cards will allow their cardholders to choose from a selection of prizes.Making The Most Of RewardsThe best way to make the most of your credit card rewards is by simply taking advantage of them. Credit card companies are amazed at the amount of cardholders who never redeem their rewards. They use their cards frequently and accumulate prizes, however they never take the time to get the prizes. The thing about credit card rewards is that unless you have a cash back program, you have to contact the company to get your prizes. Many cardholders forget about the programs or simply don’t have time to deal with them. If you do have your eyes on a prize, then you can make the most of the credit card rewards programs by using your card frequently. Use your card instead of cash and simply pay off the balance before any interest collects. This way you can get closer to your prize without being out any extra cash.Credit card rewards are a wonderful way to get excited about using your credit card. Those who usually carry cards filled to their maximum and who only pay the minimum each month may not be as excited about the credit card rewards. Unless you are able to use the card, you will not benefit. So, if your card has reached its maximum balance, work on paying it down to start benefiting from the credit cards rewards programs.

Sunday, July 26, 2009

The credit card market is seeing a boom with numerous market players. It has created a kind of choice chaos or rather a clutter. It is important to differentiate between a good and a bad market offer. We all have discussed enough about the good and best credit card offers but it is equally important to know about the credit card offers, and what to beware of.It is important to check the credentials of a credit card company before signing up for any offer since a number of fraudulent credit card companies have also sprung up along with the equal numbers of genuine ones. There is never a credit card offer that is perfect. Each has its pros and cons. Normally, if it sounds too good to be true, then it is a sure sign of being a credit card offer for someone with an adverse credit history. Offers like these can simply rip off your pocket and leave you with peanuts. They make tall claims to lure customers but if you read between the lines there is always a trap clause that takes the air out of the claim.However, desperate requirement you might have of a credit do not fall into the trap of these jazzy claims. They might claim to give you low APR and high credit limit even with your bad credit history. Now this is obviously unbelievable. More unbelievable means more unreliable.Then there could be credit card offers that are ridiculously unreasonable. For example, they may have a worthless balance transfer offer with amount limited to a level of say £500. Or there could be store cards through which you can shop only at a particular shop and that too only from a particular catalogue.These credit card offers are responsible for maximum credit card frauds or losses to customers due to unprecedented high costs. These are mostly wipe, pack and vanish firms, i.e. companies that wipe off your resources, pack their business and simply vanish leaving a big hole in your pocket.We all receive those flowery once in lifetime offers claiming to change the course of life with all the financial gains we can get through them. Remember they are out there for business. They are not going to pay out of their pockets so obviously they cannot live up to their tall claims. Think wise and smart. It is good to invest in small time lesser-known ventures but at the same time it is better to be safe. After all prevention is better than cure.